SPX S&P 500 and VIX Volatility Weekly Charts; VIX No Longer Dropping as Stock Market Rallies Identifying a Top

Something's Always Wrong. In this example, it is Uncle Vix. He refuses to lay on the floor anymore watching the stock market go higher. VIX levels off this year and as the SPX prints an all-time historic high at 5878, volatility actually rises as the all-time highs are printed. Something is very wrong with this picture. Be very afraid if you are long the stock market.

There are a couple of previous fractals exhibiting the same exact behavior as now that can be used as examples. In late 2019, the VIX leveled off and as 2020 started, and the stock market made new highs, the VIX also rallied. The VIX moves inversely to the stock market over 90% of the time so the US stock market printing a new high as volatility also rises gets your attention. Of course, the COVID-19 pandemic hit in 2020 sending the stock market into Hades.

Same behavior in 2021. The stock market was rallying to beat the band in 2021 but the VIX leveled off and was not dropping as it should since stocks were Happy. As the SPX printed a higher high at the very end of 2021, the VIX was actually rising waving a big red flag. That started the 2022 swoon in stocks. Do you think the prior behavior will repeat? Of course it will. What are you, stupid?

The SPX chart shows the three tops all occurring with negative divergence across all chart indicators (red lines) so it was easy to call the top and pending neggie d spankdown, like now. Price is also extended above the moving average ribbon requiring a mean reversion lower.

The green circles show buyable bottoms over the last few years. There are others that were not highlighted. The pandemic spike above 85 was bigtime verifying rampant fear and panic. That represents the world ending. However, as a professional trader, that is when you step in to buy. Investors are running from the burning building swearing that they will never own a stock ever again, as long as they live, and that is when you conveniently take the shares off their hands (accumulation). These dolts are the bag-holding sucka's that chase stocks higher, like now, so they get what they deserve. Do not swim with the sharks if you do not know what you are doing.

The same-day options have gained in popularity over the last year, or zero days to expiration, 0DTE if you prefer, so the natural response to the above chart is to blame the new derivatives and offerings for the unexpected behavior in the VIX. Wrongo. Even if the VIX is not used as much as an outright play or for hedging these days, the trend behavior should still be in place, and the charts above clearly show that is the case.

If you are long the stock market, you are picking up nickels in front of a bulldozer and your shoelaces are untied. Life has many choices. Are you making a major trading mistake now? Mama Tried to steer me right, Mama tried, Mama tried. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added Friday Morning, 10/25/24, at 5:05 AM EST: The SPX prints the all-time high at 5878 on 10/17/24 and then receives the neggie d spankdown dropping to 5784 two days ago now at 5810. Price is trying to hold the 20-day MA support at 5787 but that will fail as the neggie d smackdown continues. The 50-day MA support at 5677 is building strong support with the late September early October price support at the 5680-5700 range. VIX 19.01.